Oakland Apartments Trade Hands Below Assessed Values

The multifamily market in Oakland continues to face anemic property values, as evidenced by the two latest deals for apartment properties in the East Bay city. The deals are part of a broader wave of multifamily foreclosures and below-assessed sales that has swept the Bay Area for much of the year.

ArtHaus Partners and Belay Investment Group foreclosed on a loan that gave them ownership of nine apartment complexes totaling 268 units in Oakland’s Lake Merritt area for a total of $30 million, the Mercury News reported. The $30 million purchase amount, or about $111,940 per unit, is 68 percent lower than the combined assessed value of the nine residential properties as of this January, per Alameda County Assessor’s Office data cited by the Mercury News.

“The combination of being in the early innings of a tech cycle and the Oakland market having bottomed out makes this the ideal time to invest,” Riaz Taplin, founder and CEO of ArtHaus Partners, said. The company’s “near-term priorities include stabilizing the assets by renovating and leasing the currently vacant units.”

In a separate deal, South Bay investors Krishna Koganti and Seetaram Vemulapalli spent $21 million for the 83-unit Amelia apartment complex in Pill Hill after a lender previously foreclosed on the multifamily property. In October last year, SREC Amelia Owner foreclosed on the loan that financed The Amelia apartments; at the time, the unpaid debt totaled $23 million. The purchase by Koganti and Vemulapalli was at 8.7 percent less than its debt in last year’s foreclosure; on a per-unit basis, the transaction works out to about $253,000 per residence — a low per-unit price for East Bay apartments this year.

In October, Madison Realty Capital began the foreclosure process on The Fay, a 363-unit, 23-story apartment tower in San Jose, after its developer Murro defaulted on a $182.5 million construction loan. That property opened to residents late last year. And in July, the University Park apartment complex in Berkeley headed to a foreclosure auction after Academy West Investments defaulted on payments tied to the apartment complex.

Elsewhere in the East Bay, in August, an Abacus Capital Group affiliate paid $98.3 million for the 259-unit Park Central Apartments in Concord, working out to $379,500 per unit, or a total property value 24.7 percent lower than its assessed value of $130.5 million.

The Atrium Downtown apartments in Walnut Creek sold to a Fresno-based investor group led by Valley Yellow Pages CEO Siegfried Fischer, which bought the 78-unit property from Sequoia Equities for $31 million — down 3.4 percent from the complex’s most recently assessed value of $32.1 million for a per-unit price of $397,400.

— Chris Malone Méndez